Balanced Scorecard

Balanced Scorecard
Linkage of measurement to strategy
incorporates nonfinancial measurements
intangible assets to produce revenues and
profits have become the major source for
competitive advantage
 Balanced Scorecard
A Balanced Scorecard should result in:
Improved processes
Motivated/educated employees
Enhanced information systems
Monitored progress
Greater customer satisfaction
Increased financial usage
Intangible Assets
Investment in Employee Training

Better Service Quality

Higher customer satisfaction

Higher Customer Loyalty

Increased Revenues and Margins

 Balanced Scorecard
A good place to work
A good place to shop
A good place to invest

emphasize customers, shareholders and

employees
Strategy-Focused Organization
Articulate the business's vision and strategy;
Identify the performance categories that
best link the business's vision and strategy
to its results (e.g., financial performance,
operations, innovation, employee
performance);
Establish objectives that support the
business's vision and strategy;
 Framework for Organizing
Strategic Objectives
Develop effective measures and meaningful
standards, establishing both short-term
milestones and long-term targets;
Ensure companywide acceptance of the
measures;
Create appropriate budgeting, tracking,
communication, and reward systems;
 Using information from
Balance Scorecard
Collect and analyze performance data and
compare actual results with desired
performance;
Take action to close unfavorable gaps.
 Framework for Organizing Strategic
Objectives
Financial - strategy for growth, profitability and
risk viewed from the perspective of the
shareholder
customer - strategy for creating value from the
perspective of the customer
internal business processes - priorities that create
customer and shareholder satisfaction
learning and growth - priorities that support
change, innovation and growth
 Financial Perspective
Increase economic value
revenue growth
productivity
 Customer Perspective
Customer-value proposition
differentiates itself from competitors
Operational excellence
Customer intimacy
product leadership
 Internal Business Process
Metrics based on this perspective allow the
managers to know how well their business
is running
whether its products and services conform
to customer requirements (the mission).
 Learning & Growth
employee training and corporate cultural
attitudes related to both individual and
corporate self-improvement.
In the climate of rapid technological change,
it is becoming necessary for knowledge
workers to be in a continuous learning mode.
learning and growth constitute the essential
foundation for success of any knowledge-
worker organization.
 Balanced Scorecard
factors examples
Finance Return On Investment
Cash Flow
Return on Capital Employed
Financial Results
(Quarterly/Yearly)
 Balanced Scorecard
factors examples
Internal Number of activities per
Business function
Processes Duplicate activities across
functions
Process alignment (is the right
process in the right
department?)
Process bottlenecks
Process automation
 Balanced Scorecard
factors examples
Learning & Is there the correct level of
Growth expertise for the job?
Employee turnover
Job satisfaction
Training/Learning
opportunities
 Balanced Scorecard
factors examples
Customer Delivery performance to
customer
Quality performance for
customer
Customer satisfaction rate
Customer percentage of
market
Customer retention rate
 Non-for-Profit
Use of balance scorecards
Financial success is not the primary
objective
Donors provide financial resource
customers become most important
Overall long-term objective at the top of
their scorecard eg. Reduction in poverty
Overall objective = mission statement